Allocative efficiency occurs in markets when
A)goods are produced using the least amount of society's scarce resources
B)goods are produced at the lowest possible average total cost
C)goods are produced at the lowest possible marginal cost
D)the value to society of the last unit produced equals its marginal cost
E)the value to society of the last unit produced is greater than its marginal cost

Question

Quizplus · Accepted Answer

Allocative efficiency occurs when the value to society of the last unit produced is equal to its marginal cost. This means that resources are allocated efficiently to produce the right amount of goods for society, and any additional production would not benefit society as much as the resources used to produce it. Therefore, D is the best answer as it describes how allocative efficiency is achieved in markets.

Allocative Efficiency Occurs in Markets When